The world we live in, our view of it and the values we attach to it, is shaped by what we know. And when what we know changes, the world changes and with it, everything. — James Burke, The Day the Universe Changed
We can no longer answer the question of what exactly is money? What I mean by this is how money is created and valued. Money is perceived value and not guaranteed by anything physical and scarce. Its creation is complex and varies by country.
Interestingly robust cryptocurrency project’s value is linked to the limited supply that will circulate in the market. Attributing this finite supply gives scarcity and adds value — preventing the cryptocurrency from being devalued by a limitless quantity.
I make this point as society needs new innovative solutions as our lives increasingly move online and become more fragile. We have seen the crisis in countries where banking systems have failed, and sadly people have lost life-long savings they thought were safe.
Our systems have become more interconnected, less secure and complex. I believe blockchain can help bring about change to our foundational systems and create a more transparent, stable, and inclusive future of all.
In part one of this two-part series, I have listed questions for you to decide if blockchain is the right solution for your problem.
While out walking, a writer often encountered a man walking his four dogs. Three of the dogs ran and played through the fields, but one stayed near its owner, running in circles. When the writer finally stopped and asked about this odd behavior, the owner explained that it was a rescue dog that had spent most of his life locked in a cage. The rescue dog continued to run in circles as though contained inside a confined box.
How are we running in circles confined to a box blocking innovation? How are we future-proofing our careers?
When a task is narrowly defined, we require no creativity, which is how most of our working environments have been formed in the last century. As we transition into the future of work and adopt new working practices where narrowly defined tasks will be automated, we need to start overhauling our education systems and future-proofing out businesses now in 2020.
The future of work has the potential to be more creative, collaborative, and interconnected and solve problems across nations and borders. Competition and combative markets that served us in the past will not help us well in the future. Collaboration is critical, and blockchain is one limitless global collaborative digital tool that can be used to help with this problem.
Acknowledging this change will give everyone higher capacity and time to future-proof their careers and hopefully to the benefit of all global citizens.
Intangibles economy an abstract concept
With the adoption of emerging technologies and society becoming more aware of their data usage by third-parties, the potential is here in the next decade to lay the foundations that will enable a more comprehensive intangibles-based economy.
The intangibles economy is an abstract concept, but one that is driving the 21st-century economy and fuelling exciting technological innovations, such as blockchain and decentralized applications.
This invisible marketplace is one area I think peer-to-peer payments enabled by blockchain will become an essential part of our society’s financial fabric and the future of better inclusion.
In the post-bitcoin innovation world and the growth of the intangibles-based economy, it appears society is already reimagining money and our global footprint.
Intangible-concepts become tangible
Companies like Airbnb and Uber were once concepts, and these companies do not own the assets they sell. They developed highly scalable digital products that innovatively enable the buying and selling of services globally — all without owning any of the real assets and the financial risk associated with doing so.
According to Reuters, Airbnb’s revenue for 2017 topped $2.5 billion, more than 50 per cent increase over 2016. Regardless of the abstract nature of companies like Airbnb and Uber, they are now companies that have delivered global success.
Abstract ideas are hard to value by finance professionals and investors, and we have seen this with over-inflated valuations of ideas-only based companies and the blockchain concepts that have failed.
Nonetheless, estimates are that by 2040 the intangibles-based marketplace could generate a new global wealth value estimated at a staggering US$ 1,281 trillion, an industry that is ripe for disruption.
Reinventing our financial systems
The adoption of blockchain technologies is here to help reinvent the financial payments system as we currently know it. The convergence of new technologies is why it is only now blockchain visionaries, developers, entrepreneurs and academics can come together to innovate at a scale and pace not seen before.
Blockchain was around before bitcoin’s invention in 2008. Still, the acceptance of other technologies, such as cloud computing, was not universally accepted as a standard business practice until late in the last decade. Algorand’s innovation has been 20 years plus in the making by visionary computer scientist and innovator MIT Professor Silvio Macali.
These advances in other technologies out with blockchain and hope to make the world a better place is why it is only now we have the right technological tools at our disposal to reimagine e-commerce and even our digital selves.
Why reimagine our financial services?
The benefit of reinventing our current financial systems and using blockchain technology is a more inclusive future for all. The efficiencies and capabilities blockchain technology offer is the potential to lower operating costs in areas such as transaction fees. For example, when you pay for your coffee by card, your payment goes through approximately five to seven intermediaries.
Blockchain can help replace legacy centralized operating systems that are continuously under cyberattacks, where malicious actors are primarily after your data. Institutions incur high costs to their business to secure the centralized systems that protect your data.
In a blockchain world, our financial systems could become more secure, efficient, inclusive, and user-friendly. Your data is your data and on a blockchain that is not susceptible to a malicious attack and protected at the highest level by complex mathematical problems that require solving to penetrate the perimeter — a virtually impossible endeavour.
Global transaction fees
Taking a closer look at the implications of global transaction fees, this cost element alone makes it harder for our centralized financial systems to support micropayments.
The effect this has on society is not all people can benefit from the global economy and are consequently excluded or using expensive third-parties to transfer small payments globally.
A 2018 McKinsey report cited transaction fees could be $2 trillion business by 2020.
Blockchain technology can enable cheaper global payments by lowering transaction fees for all transaction types. We are thereby allowing more people to participate in the economy because we now have the technology to enable micro-payments transactions, which until blockchain were too expensive.
In a blockchain-based financial system, whether a business or individual, the system enables each participant treated as equals, which we have seen in the innovation of bitcoin.
The public appetite for Satoshi Nakamoto’s innovation, bitcoin, has spurred technology entrepreneurs such as Algorand, Ethereum, Celsius Network, and other blockchain visionaries to reimagine our global payments system.
I think blockchain technology is the future of finance. Companies like Algorand are pioneering the reimagination of our global financial systems.
Led by Turing award-winner Professor Silvio Micali and a renowned team of cryptographers, engineers, and mathematicians, Algorand is committed to the ongoing development of best-in-class solutions for the future of economic exchange.
Algorand has developed an open, permissionless, pure proof of stake blockchain that does not enable forking, something that is key for any financial system to operate successfully in the future.
Blockchain forks and what Algorand does differently
Forking is where parties on the blockchain cannot reach an agreement on a particular block.
A block on a blockchain holds the asset details, so if a fork is enabled, it could forfeit the integrity of the data on that blockchain and becomes a risk to a financial operating system, one which should be considered when evaluating blockchain solutions.
A misconception is that an open system means forfeiting security and privacy; in fact, it is the opposite. As a next-generation blockchain, Algorand enables all financial institutions to take part in the decentralized economy safely and with less risk due to the significant protocol upgrades in their 2.0 release.
What Makes Algorand Different?
Bitcoin, Ethereum, and Litecoin have led the way in crypto adoption. Algorand is hoping to be part of the next generation of crypto and offers a scalable solution as well as solving the problem of the blockchain trilemma.
At a simple level, there are no miners and its proof of stake.
Let’s take a more in-depth look at the critical differences of Algorand compared to other projects in the space.
Pure Proof of Stake
While not the first crypto to use pure proof of stake, many believe the future of blockchain technology is proof of stake, as it provides improved efficiencies on transaction times.
Pure proof of stake represents a significant upgrade compared to the proof of work model by requiring far fewer energy-consuming resources and presents a much safer alternative to proof of work.
Again, Algorand has no miners and uses a random selection process for confirming transactions. A random lottery selection is used to determine who is responsible for confirming each transaction, it increases the safety of the network because bad attackers have no idea who to “attack.”
Through user replaceability, the entire block procedure is performed without anyone but the user knowing they are selected, this significantly reduces the chance of bad actors attacking the network, as it’s virtually impossible for them to know where to attack. If a bad actor does decide to attack the chain, it’s already too late, and they cannot benefit from their actions.
Simple programming language
Algorand was built with scalability in mind. The code is robust and designed to be an easy build for new users and crypto professionals alike. Using the programming language “Go” makes it an accessible programming language for developers.
The more people around the world that can participate in building the future of Algorand, the more inclusive the technology becomes.
Algorand has implemented Dutch auctions for their coin release (Algos) making it easy for anyone to become an Algo holder, Algorand is working to create a truly decentralized crypto by releasing tokens into the economy over the next five years. Their first Dutch auction was held in June 2019 and ensured that all participants of the coin offering paid the same price for the Algo tokens.
For cryptocurrency to be widely adopted, it must be inclusive by nature, allowing anyone with an interest to be involved in the projects of their choice. Algorand designed its technology to be inclusive and fair from the start.
Self-Selection via Verifiable Random Function (VRF)
Algorand aims to achieve its vision by relying on self-selection and user replaceability. The selection of users to participate in the certification of blocks using the VRF is made randomly and secretly, without any communication among the users. Since executing this procedure requires a user’s private key, no one except for that user knows whether they were
selected, and by the time an adversary realizes that a user is selected, it is too late for them to benefit from an attack; the user has already sent their message and fulfilled their responsibility in the consensus protocol.
Decentralized applications or dApps are applications built on top of a blockchain infrastructure layer. Think of blockchain infrastructure like building a house. The builders who lay the foundation are not the same as the joiners who are the carpenters of the house frame.
Each specialist builder has a part to play and the home cannot be built without each person and their specialist skill doing their part.
The blockchain foundation layer allows developers in conjunction with the blockchain community and business specialists to create a user-friendly portal to utilize blockchain technology for anyone without the need to understand the underlying technology.
However, we have also seen the emergence of scams where malicious actors are luring customers to believe their company has built on a blockchain. But this was not the case, and they were manipulating a traditional database located on central servers. Before taking part in the blockchain or crypto economy, please do your due diligence. Blockchain is not always the solution you require by an individual or business.
Blockchain part of your digital toolkit
It is worth remembering that blockchain is not a solution to fix every business problem. Blockchain technology is part of your digital toolkit and one of the many technology solutions which may provide the answer to the current business problem in your industry.
To state the obvious, the number one business problem in the 21st century is how your business stays relevant today, but that does not mean blockchain is your answer.
Blockchain has the potential to be the foundational layer for a new era of e-commerce, one which is more inclusive and sustainable.
As we reimagine money, the future of work, and the foundations that could help society with this transition, we should not dismiss bitcoin, cryptocurrencies, and blockchain because they are complex concepts.
Dismissing blockchain at this stage would be a lost opportunity our community has for evolving our financial and banking systems in the next decade.
The applications that we build on reputable blockchain systems can unlock the growing intangibles economy and enable inclusion and reimagining our world for all.
What decentralized blockchain-enabled applications can we build to help with this growing marketplace and lead to universal prosperity for all?